The legislation that has been the backbone of commercial leasing in England and Wales for nearly 70 years is set to undergo a thorough review by the Law Commission of England and Wales.
The Department for Levelling Up, Housing and Communities has commissioned the review as part of the Government’s Anti-Social Behaviour Action Plan, with a view to examining the provisions within the LTA 1954 to ensure it continues to meet the needs of commercial tenants while balancing the interests of landlords
The review is expected to consider various aspects of the LTA 1954 including: the security of tenure provisions (the continuation of business tenancies following the expiration of the contractual term and a tenant’s right to a new lease), lease models, rents and interim rents, compensation payable when a lease is not renewed and the grounds of opposition to lease renewal, and the court’s processes and considerations when determining terms of the renewal lease.
It has been almost two decades since the LTA 1954 was last reviewed and amended, despite it being widely described as inflexible, bureaucratic and outdated. The concern is that in its current form, the LTA 1954 continues to causes unnecessary delays for both landlords and tenants, leaving many commercial spaces vacant for longer than is necessary, and hindering the growth of local economies and the long-term resilience of the high street and town centres.
Changes in the business landscape due to the rise of online retail, the financial crisis of 2008, and the recent pandemic means that the necessity for modernisation surrounding commercial leasing legislation has become more important l than ever.
The aim behind the review is to develop a modern legal framework that is widely adopted by commercial parties enabling businesses and communities to grow and thrive, which under the current regime is hindered by parties entering into leases which opt out of the “security of tenure”, leaving tenants without their longstanding right to a new lease and potential disruption to business continuity.
Dehenna Davison MP, Parliamentary-Under Secretary for Levelling Up, explained:
“For too long commercial tenants and landlords alike have been held back by a legislative framework that is outdated and out of sync with the realities of the sector today.
With this review of the legislation, we hope to remove the barriers that inhibit growth by modernising the legal framework and making sure it is fit for today’s market, supporting the efficient use of space and fostering a productive, beneficial leasing relationship between landlords and tenants.
In achieving these goals this review will help to create a leasing framework that supports the Government’s priorities of growing the economy and aiding the regeneration of our town centres. The review will also help to make leasing clearer and more easily accessible to small businesses and community groups, reducing the growing number of vacant properties on our high streets and the anti-social behaviour that comes with it.”
The Law Commission aims to publish its consultation paper on the matter by December 2023.
